Innovations in the energy sector can save billions US dollars

Technological changes in the sphere of power consumption and production can “release” from USD 900 billion to USD 1.6 trillion for the global economy by 2035. McKinsey Global Institute (MGI) has published a new report on how technologies change the world.

Content: Market players who will have not adjusted to the new technological realities will have to go through a free economic fall, authors of the McKinsey Global Institute’s report named “Outside of the Super Cycle: How Technologies Alter Resources.” Speaking about the “ill-fitted” parties the experts primarily have in mind “getters” of fossil resources.

Exporters of resources whose finances depend on resource provision and demand have higher chances to fit in poorly into the new economic landscape. Implementation of new technologies is an important task, but this is not enough; they will have to find alternative sources of revenues. They could have taken the advantages of the “revolution of resources.” Traditional operators should strive to develop sustainable business models in the new realities, and not all of them will be the winners in this race, the experts pointed out.

The demand for quite a few goods, oil in particular, might reach its maximum in the nearest future; however, prices may vary quite noticeably. How long would this period be depends not only on the technological capacities but also on how well the resource producers and politicians will be able to adapt to the new realities.

The fast progress in the sphere of technologies: creation of the artificial intellect, automation, data analysis, and the internet among other things, is quickly modifying the resource sector. This might bring perceptible savings for consumers and such a necessary enhancement of the productivity for producers in the course of the two next decades, authors of the McKinsey Global Institute’s report wrote. Optimization of energy sources exploitation can by 2035 bring savings in the amounts equal to the GDP of such countries as Canada or Indonesia.

Experts outlined the three major outcomes from the introduction of new technologies:

1. Energy consumption will become less intensive: people will be more efficient in using power at home, in the offices and production plants; among other things, they will be using optimizing smart thermostats and lightening consumption. Key changes will take place in the sphere of transportation, the major oil consumer. The trend for reduction of demand on oil for the automobile transport had started in 2015. Engines become more and more economic, while exploitation of autonomous and electrical transportation means goes up.

2. Renewable sources of energy, including energy of the sun and wind keep getting cheaper and will become even more competitive as compared to fossil fuels. For this reason, they will turn into the biggest quota of the global power sector. By 2035, the renewable energy sector in the global power production might grow from the present 4% to 36%.

3. Resource producers can use a number of new technologies which had earlier been inaccessible in their activities. These can be used to enhance efficiency of extraction methods; transfer to diagnostic maintenance, and complex data analysis for identification, extraction, and management of resources.

Jonathan Woetzel, McKinsey Global Institute: “In the past, changes in the raw materials sector were a result of regulating, while now they are the technology, the moving force of transformations. Our new study shows that the global economy has vast capacities to make considerable power savings within the next two decades through technological changes. Governments of all countries, both exporting and importing resources, will be able to influence the economy at the account of reduction of demand for power in diverse spheres of economy...”

“While the goals which resource producers and politicians have to aspire for will be, most likely, quite complicated, merits from higher productivity and high growth rates can bring benefits to everybody.”